RP 25-1 A portfolio consists of two bonds. Bond A matures in 2 years and pays semiannual coupons at a nominal annual rate of 6% per year. Bond B matures in 5 years, is priced at par, and has a (Macaulay) duration of 4.218. Both bonds have a par value and a redemption value of $5,000 and are not callable. The yield of each bond is 8% nominal, compounded semiannually. (a) Determine the (Macaulay) duration of bond A. (b) Calculate the (Macaulay) duration of the portfolio. RP 25-2 The current price of a bond is $110 and its effective annual yield is 7%. The modified duration is 5. Estimate the price of the bond, using the first-order modified approximation, if its yield falls to 6%